UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT 

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): April 24, 2017

 

Behringer Harvard Opportunity REIT I, Inc. 

(Exact Name of Registrant as Specified in Its Charter)

 

Maryland		000-51961		20-1862323
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

14675 Dallas Parkway, Suite 600, Addison, Texas 75001  

(Address of principal executive offices)
(Zip Code)

 

(888) 808-7348 

(Registrant’s telephone number, including area code)

 

None 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

The information below regarding an amendment to the Chase Park Agreement (as defined below) is incorporated herein by reference.

 

Item 2.01 Completion of Acquisition or Disposition of Assets

 

On March 16, 2017, Behringer Harvard Opportunity REIT I, Inc. (the “Registrant” or “Company”), through its indirect wholly-owned subsidiaries Chase Park Plaza Hotel, LLC and CPPH, LLC (collectively, the “Seller”), entered into a purchase and sale agreement (the “Chase Park Agreement”) pursuant to which it would sell the Chase Park Plaza Hotel located in St. Louis, Missouri (the “Chase Park Plaza Hotel”) to Hospitality Properties Trust (the “Buyer”), an unaffiliated third party for a contractual sales price of $94.0 million. Pursuant to the terms of the Chase Park Agreement, the Buyer had 30 days, subject to an extension under certain conditions, to conduct due diligence. Additionally, during the due diligence period the Buyer could, among other things, request a price adjustment. During the due diligence period the Buyer requested a price adjustment, and on April 24, 2017, the Seller and Buyer executed an amendment to the Chase Park Agreement to adjust the contractual sales price to $87.8 million.

 

On June 2, 2017, the Seller completed the sale of the Chase Park Plaza Hotel to the Buyer pursuant to the terms of the Chase Park Agreement, as amended.  In connection with the closing, a portion of the proceeds from the sale were used to pay off in full the existing indebtedness of approximately $60.2 million secured by the property.  The Chase Park Plaza Hotel was acquired on December 8, 2006.

  

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	BEHRINGER HARVARD OPPORTUNITY REIT I, INC.
Dated: June 8, 2017	By:	/s/ Lisa Ross
		Lisa Ross
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

 

 

  

Item 9.01

Financial Statements and Exhibits.

 

(b)

Pro forma financial information.

 

The Company’s unaudited pro forma condensed consolidated statement of net assets in liquidation at March 31, 2017 illustrates the estimated effects of the dispositions of (i) the Chase Park Plaza Hotel referred to in Item 2.01 above (the “Chase Park Plaza Hotel Transaction”) and (ii) The Ablon at Frisco Square referred to in Item 2.01 of the Company’s Current Report on Form 8-K dated May 26, 2017 (the “Ablon at Frisco Square Transaction” and collectively with the Chase Park Plaza Hotel Transaction, the “Transactions”) as if they had occurred on such date.

 

The unaudited pro forma condensed consolidated statement of changes in net assets in liquidation for the period February 1, 2017 through March 31, 2017, and the unaudited pro forma condensed consolidated statements of operations for the one month ended January 31, 2017 and for the year ended December 31, 2016 include certain pro forma adjustments to illustrate the estimated effect of the Transactions as if they had occurred on the first day of the earliest period presented.

 

The unaudited pro forma condensed consolidated statement of changes in net assets in liquidation and statements of operations are presented for informational purposes only and do not purport to be indicative of the Company’s financial results as if the Transactions had occurred on the first day of the earliest period presented. Further, the unaudited pro forma condensed consolidated statement of net assets in liquidation, statement of changes in net assets in liquidation and statements of operations should not be viewed as indicative of the Company’s financial results in the future; and should be read in conjunction with the Company’s financial statements as filed with the Commission on Form 10-Q for the quarterly period ended March 31, 2017 and on Form 10-K for the year ended December 31, 2016.

  

  

BEHRINGER HARVARD OPPORTUNITY REIT I, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF

NET ASSETS IN LIQUIDATION

March 31, 2017

(Liquidation Basis)

(in thousands)  

 

					The Ablon at				Chase Park
					Frisco Square				Plaza Hotel
	Historical				Disposition				Disposition				Pro Forma
	March 31,				Pro Forma				Pro Forma				March 31,
	2017				Adjustments				Adjustments				2017
Assets
Real estate assets	$	242,879			$	(52,301	)	(a)	$	(85,995	)	(a)	$	104,583
Equity investments		6,416				-				-				6,416
Cash and cash equivalents		24,370				52,374		(a)		83,329		(a)
						(26,300	)	(b)		(60,207	)	(b)
										5,492		(b)		79,058
Restricted cash		8,567				-				2,000		(a)
										(5,492	)	(b)		5,075
Accounts receivable		2,167				(45	)	(b)		(1,777	)	(b)		345
Other assets		1,342				(12	)	(b)		(643	)	(b)		687
Total Assets		285,741				(26,284	)			(63,293	)			196,164
Liabilities
Notes payable		141,498				(26,300	)	(b)		(60,207	)	(b)		54,991
Liability for noncontrolling interests		4,793				131		(c)		-				4,924
Liability for estimated costs in excess of estimated receipts during liquidation		5,081				(255	)	(d)		(325	)	(d)		4,501
Accounts payable		1,162				-				(1,050	)			112
Due to related parties		579				-				(42	)			537
Accrued and other liabilities		22,659				(426	)	(b)		(3,293	)	(b)		18,940
Total Liabilities		175,772				(26,850	)			(64,917	)			84,005
Commitments and contingencies
Net assets in liquidation	$	109,969			$	566			$	1,624			$	112,159

 

 

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

 

 

 

BEHRINGER HARVARD OPPORTUNITY REIT I, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF

CHANGES IN NET ASSETS IN LIQUIDATION

(Liquidation Basis)

(in thousands)

 

					The Ablon at					Chase Park
					Frisco Square					Plaza Hotel
	Historical for the Period				Disposition					Disposition					Pro Forma for the Period
	from February 1, 2017				Pro Forma					Pro Forma					from February 1, 2017
	through March 31, 2017				Adjustments					Adjustments					through March 31, 2017
Net assets in liquidation, beginning of period	$	109,969			$	566		(a)		$	1,624		(a)		$	112,159
Changes in net assets in liquidation		-				-					-					-
Net assets in liquidation, end of period	$	109,969			$	566				$	1,624				$	112,159

 

 

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

 

 

 

BEHRINGER HARVARD OPPORTUNITY REIT I, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE ONE MONTH ENDED JANUARY 31, 2017

(Going Concern Basis)

(in thousands, except per share amounts)

 

					The Ablon at				Chase Park
					Frisco Square				Plaza Hotel
	Historical				Disposition				Disposition				Pro Forma
	One Month Ended				Pro Forma				Pro Forma				One Month Ended
	January 31, 2017				Adjustments (a)				Adjustments (a)				January 31, 2017
Revenues
Rental revenue	$	1,277			$	(390	)		$	—			$	887
Hotel revenue		2,284				—				(2,015	)			269
Total revenues		3,561				(390	)			(2,015	)			1,156
Expenses
Property operating expenses		475				(96	)			(8	)			371
Hotel operating expenses		2,163				—				(1,856	)			307
Bad debt recovery		(5	)			4				—				(1	)
Interest expense		717				(82	)	(b)		(293	)	(b)		342
Real estate taxes		401				(71	)			(130	)			200
Property management fees		96				(10	)			(49	)			37
Asset management fees		159				(16	)	(c)		(42	)	(c)		101
General and administrative		322				—				—				322
Depreciation and amortization		869				(142	)			(305	)			422
Total expenses		5,197				(413	)			(2,683	)			2,101
(Loss)/income before income tax expense and equity in earnings of unconsolidated joint venture		(1,636	)			23				668				(945	)
Income tax expense		(6	)			—				—				(6	)
Equity in earnings of unconsolidated joint venture		25				—				—				25
Net (loss)/income		(1,617	)			23				668				(926	)
Net loss/(income) attributable to noncontrolling interest		35				(1	)			—				34
Net (loss)/income attributable to common shareholders	$	(1,582	)		$	22			$	668			$	(892	)
Weighted average shares outstanding
Basic and diluted		56,500												56,500
Basic and diluted loss per share	$	(0.03	)										$	(0.02	)

 

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

 

 

 

BEHRINGER HARVARD OPPORTUNITY REIT I, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2016

(Going Concern Basis)

(in thousands, except per share amounts)

 

						The Ablon at				Chase Park
						Frisco Square				Plaza Hotel
		Historical				Disposition				Disposition				Pro Forma
		December 31,				Pro Forma				Pro Forma				December 31,
		2016				Adjustments (a)				Adjustments (a)				2016
Revenues
Rental revenue		$	15,425			$	(2,622	)		$	-			$	12,803
Hotel revenue			36,668				-				(32,084	)			4,584
Condominium sale			2,271				-				-				2,271
Total revenues			54,364				(2,622	)			(32,084	)			19,658
Expenses
Property operating expenses			6,637				(1,135	)			(108	)			5,394
Hotel operating expenses			28,961				-				(23,804	)			5,157
Bad debt expense			75				-				-				75
Cost of condominium sale			2,271				-				-				2,271
Interest expense			9,316				(665	)(b)			(3,498	)(b)			5,153
Real estate taxes			4,087				(735	)			(874	)			2,478
Impairment charge			9,247				-				-				9,247
Property management fees			1,614				(125	)			(777	)			712
Asset management fees			2,109				(267	)(c)			(500	)(c)			1,342
General and administrative			5,553				-				-				5,553
Depreciation and amortization			10,883				(1,419	)			(3,580	)			5,884
Total expenses			80,753				(4,346	)			(33,141	)			43,266
Interest income			5				-				(10	)			(5	)
Other expense, net			(101	)			-				86				(15	)
Gain on debt extinguishment			1,624				-				-				1,624
(Loss)/income before gain on sale of real estate, income tax expense and
equity in earnings of unconsolidated joint venture			(24,861	)			1,724				1,136				(22,004	)
Gain on sale of real estate			3,027				-				-				3,027
Income tax expense			(111	)			-				-				(111	)
Equity in earnings of unconsolidated joint venture			1,615				-				-				1,615
Net (loss)/income			(20,330	)			1,724				1,136				(17,473	)
Net loss/(income) attributable to noncontrolling interest			566				(154	)			-				412
Net (loss)/income attributable to common shareholders		$	(19,764	)		$	1,570			$	1,136			$	(17,061	)
Weighted average shares outstanding
Basic and diluted			56,500												56,500
Basic and diluted loss per share		$	(0.35	)										$	(0.30	)

 

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

 

 

 

BEHRINGER HARVARD OPPORTUNITY REIT I, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except where stated in millions)

 

1.

Basis of Presentation

 

The accompanying unaudited pro forma condensed consolidated statement of net assets in liquidation of the Company is presented as if the dispositions of (i) the Chase Park Plaza Hotel and (ii) The Ablon at Frisco Square described in Note 2. “Pro Forma Transactions” had occurred as of March 31, 2017. The accompanying unaudited pro forma condensed consolidated statement of changes in net assets in liquidation presented for the period from February 1, 2017 through March 31, 2017 and the statements of operations of the Company presented for the one month ended January 31, 2017 and for the year ended December 31, 2016 (collectively the “Pro Forma Periods”) include certain pro forma adjustments to illustrate the estimated effect of the Company’s disposition, described in Note 2. “Pro Forma Transactions”, as if they had occurred as of the first day of the earliest period presented. The amounts included in the historical columns represent the Company’s historical statement of net assets in liquidation, statement of changes in net assets in liquidation and operating results for the respective Pro Forma Periods presented.

 

The accompanying unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X and do not include all of the information and note disclosures required by generally accepted accounting principles of the United States (“GAAP”). Pro forma financial information is intended to provide information about the continuing impact of a transaction by showing how a specific transaction or group of transactions might have affected historical financial statements. Pro forma financial information illustrates only the isolated and objectively measurable (based on historically determined amounts) effects of a particular transaction, and excludes effects based on judgmental estimates of how historical management practices and operating decisions may or may not have changed as a result of the transaction. Therefore, pro forma financial information does not include information about the possible or expected impact of current actions taken by management in response to the pro forma transaction, as if management’s actions were carried out in previous reporting periods.

 

This unaudited pro forma condensed consolidated financial information is presented for informational purposes only and does not purport to be indicative of the Company’s financial results or financial position as if the transactions reflected herein had occurred, or been in effect during the Pro Forma Periods. In addition, this unaudited pro forma condensed consolidated financial information should not be viewed as indicative of the Company’s expected financial results for future periods.

 

2.

Pro Forma Transactions

 

The Ablon at Frisco Square Transaction:

 

On April 10, 2017, the Company, through The Ablon at Frisco Square, LLC (the “Ablon Frisco Square Joint Venture”), an indirect 90%-owned subsidiary, entered into a contract of sale (the “Ablon Agreement”) pursuant to which it would dispose of its 275-unit multifamily community located in Frisco, Texas (“The Ablon at Frisco Square”) to the Rose at Frisco Square, LLC (the “Rose at Frisco Square”), an unaffiliated third party, at a contractual sales price of $53.5 million.

 

On May 23, 2017, the Ablon Frisco Square Joint Venture completed the disposition of The Ablon at Frisco Square to the Rose at Frisco Square pursuant to the terms of the Ablon Agreement.  In connection with the closing, a portion of the proceeds from the disposition of the asset were used to pay off in full the existing indebtedness of approximately $26.3 million secured by the property.  The development of The Ablon at Frisco Square multifamily community was substantially completed in February 2016 at which time it commenced operations.

 

 

 

BEHRINGER HARVARD OPPORTUNITY REIT I, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except where stated in millions)

 

2.

Pro Forma Transactions (continued)

 

The Chase Park Plaza Transaction:

 

On March 16, 2017, the Seller entered into the Chase Park Agreement pursuant to which it would dispose of the Chase Park Plaza Hotel to the Buyer for a contractual sales price of $94.0 million. Pursuant to the terms of the Chase Park Agreement, the Buyer had 30 days, subject to an extension under certain conditions, to conduct due diligence. Additionally, during the due diligence period the Buyer could, among other things, request a price adjustment. During the due diligence period the Buyer requested a price adjustment, and on April 24, 2017, the Seller and Buyer executed an amendment to the Chase Park Agreement to adjust the contractual sales price to $87.8 million.

 

On June 2, 2017, the Seller completed the sale of the Chase Park Plaza Hotel to the Buyer pursuant to the terms of the Chase Park Agreement, as amended.  In connection with the closing, a portion of the proceeds from the sale of the asset were used to pay off in full the existing indebtedness of approximately $60.2 million secured by the property.  The Chase Park Plaza Hotel was acquired on December 8, 2006.

 

 

3.

Adjustments to Unaudited Pro Forma Condensed Consolidated Statement of Net Assets in Liquidation (Liquidation Basis)

 

The adjustments to the unaudited pro forma condensed consolidated statement of net assets in liquidation represent adjustments needed to the Company’s historical statement of net assets in liquidation as if the completed dispositions of (i) The Ablon at Frisco Square and (ii) the Chase Park Plaza Hotel had occurred as of March 31, 2017.

 

(a)

These adjustments reflect the net adjustment to real estate assets and the net proceeds received from the completed dispositions of (i) The Ablon at Frisco Square and (ii) the Chase Park Plaza Hotel and the elimination of the related account balances as if the dispositions were consummated as of March 31, 2017. The estimated liquidation values of The Ablon at Frisco Square and the Chase Park Plaza Hotel were approximately $52.3 million and $86.0 million, respectively, as of February 1, 2017.

 

	The Ablon at				Chase Park
	Frisco Square				Plaza Hotel
	Disposition				Disposition
Contractual sales price	$	53,500			$	87,750
Estimated closing and transaction costs		(1,199	)			(1,755	)
Carrying value of real estate assets	$	52,301			$	85,995
Contractual sales price	$	53,500			$	87,750
Closing and transaction costs paid at closing		(499	)			(887	)
Net operating costs paid at closing		(627	)			(1,534	)
Restricted cash held in escrow		-				(2,000	)
Net cash proceeds	$	52,374			$	83,329

  

(b)

These adjustments reflect the use of a portion of the net cash proceeds received from the completed dispositions of The Ablon at Frisco Square and the Chase Park Plaza Hotel to pay down their existing indebtedness, including accrued interest, accounts receivable and other assets as well as the release of restricted cash.

 

 

 

BEHRINGER HARVARD OPPORTUNITY REIT I, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except where stated in millions)

 

3.

Adjustments to Unaudited Pro Forma Condensed Consolidated Statement of Net Assets in Liquidation (Liquidation Basis) (continued)

 

(c)

These adjustments reflect the increase in the liability for noncontrolling interests for the joint venture partner’s share of net proceeds resulting from the disposition of The Ablon at Frisco Square.

 

(d)

These adjustments reflect the reduction of estimated costs in excess of estimated receipts during liquidation.

 

4.

Adjustments to Unaudited Pro Forma Condensed Consolidated Statement of Changes in Net Assets in Liquidation (Liquidation Basis)

 

The adjustments to the unaudited pro forma condensed consolidated statement of changes in net assets in liquidation represent adjustments needed to the Company’s historical statements of net assets as if the completed dispositions of (i) The Ablon at Frisco Square and (ii) the Chase Park Plaza Hotel had occurred on the first day of the Pro Forma Period presented.

 

(a)

The Ablon at Frisco Square Transaction:

 

Net assets in liquidation related to The Ablon at Frisco Square increased primarily as a result of a change in estimate of the closing and transaction costs related to the disposition of the property, offset partially by an increase in the liability for noncontrolling interests for the joint venture partner’s share of net sales proceeds and a reduction in estimated receipts in excess of estimated costs during liquidation.

 

The Chase Park Plaza Transaction:

 

Net assets in liquidation related to the Chase Park Plaza Hotel increased primarily as a result of a change in estimate of the closing and transaction costs related to the disposition of the property and a reduction in estimated receipts in excess of estimated costs during liquidation.

 

5.

Adjustments to Unaudited Pro Forma Condensed Consolidated Statements of Operations (Going Concern Basis)

 

The adjustments to the unaudited pro forma condensed consolidated statement of operations represent adjustments needed to the Company’s historical results to remove the historical operating results of the completed dispositions of (i) The Ablon at Frisco Square and (ii) the Chase Park Plaza Hotel as if they had occurred on the first day of the first Pro Forma Periods presented.

 

(a)

Except as described in (b) and (c) below, these amounts represent the elimination of the operations on the completed dispositions of (i) The Ablon at Frisco Square and (ii) the Chase Park Plaza Hotel from the historical amounts for the one month ended January 31, 2017 and for the year ended December 31, 2016, to give effect to the completed dispositions of these properties as if the dispositions had occurred on the first day of the first Pro Forma Periods presented. These properties were classified in continuing operations because the proposed dispositions of these properties would neither cause a strategic shift in the Company, nor were they considered to have a major impact on the Company’s business. Therefore, the properties did not qualify as discontinued operations under ASU 2014-08.

 

 

 

 

 BEHRINGER HARVARD OPPORTUNITY REIT I, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except where stated in millions)

 

5.

Adjustments to Unaudited Pro Forma Condensed Consolidated Statements of Operations (Going Concern Basis) (continued)

 

(b)

Represents the elimination of interest expense and loan cost amortization to reflect the use of net cash proceeds from the completed dispositions of (i) The Ablon at Frisco Square and (ii) the Chase Park Plaza Hotel, to retire the indebtedness that was collateralized by the properties as if the disposition occurred on the first day of the first Pro Forma Periods presented.

 

(c)

Amount includes the elimination of asset management fee expenses attributable to The Ablon at Frisco Square and the Chase Park Plaza Hotel for the one month ended January 31, 2017 and for the year ended December 31, 2016.  The asset management fees related to Ablon at Frisco Square were historically paid by the joint venture to its managing member and to the Company’s advisor. The Chase Park Plaza Hotel asset management fees were paid to the Company’s advisor.